Investors Presentation Cautionary Statement Regarding Forward - PowerPoint PPT Presentation

March 2019 Investors Presentation

Cautionary Statement Regarding Forward Looking Statements his presentation includes statements that constitute forward-looking government programs we participate in; risks related to taxation; changes in statements within the meaning of safe harbor provisions of the Private customer demand for our products; risks related to currency fluctuations; risks Securities Litigation Reform Act of 1995 relating to future events or our related to technology security threats and changes in privacy laws; risks future performance, such as statements regarding, but are not limited to, related to acquisitions we may pursue and risks related to our operations in anticipated growth opportunities and projections about our business and its Israel. We cannot guarantee future results, levels of activity, performance or future revenues, expenses and profitability. Forward-looking statements achievements. The matters discussed in this presentation also involve risks involve known and unknown risks, uncertainties and other factors that may and uncertainties summarized under the heading “Risk Factors” in Nova’s cause our actual results, levels of activity, performance or achievements to be most recent Annual Report on Form 20-F for the year ended December 31, materially different from any future results, levels of activity, performance or 2018 filed with the Securities and Exchange Commission on February 28, achievements expressed or implied in those forward- looking statements. You 2019. These factors are updated from time to time through the filing of should not place undue reliance on forward-looking statements since they reports and registration statements with the Securities and Exchange involve known and unknown risks, uncertainties and other factors which are in Commission. Any forward-looking statements contained in this presentation some cases beyond our control. Factors that may affect our results, are made as of the presentation date and Nova Measuring Instruments Ltd. is performance, circumstances or achievements include, but are not limited to under no obligation to revise or update these forward-looking statements. the following: our dependency on three product lines; our dependency on a This following presentation includes financial measures that are not calculated small number of large customers and small number of suppliers; the highly in accordance with generally accepted accounting principles (GAAP). The cyclical and competitive nature of the markets we target and we operate in; presentation of this non-GAAP financial information is not intended to be our inability to reduce spending during a slowdown in the semiconductor considered in isolation or as a substitute for the financial information prepared industry; our ability to respond effectively on a timely basis to rapid and presented in accordance with GAAP. Nova's earning release, including a technological changes;; our dependency on PEMs; risks related to exclusivity presentation of the most directly comparable financial measures calculated obligations and non-limited liability that may be included in our commercial and presented in accordance with GAAP and a reconciliation of each GAAP to agreements and arrangements; our ability to retain our competitive position non-GAAP financial measure discussed in the presentation is available at the despite the ongoing consolidation in our industry; risks related to our Investors section of the company’s website. dependence on our manufacturing facilities; risks related to changes in our Certain of the information contained herein concerning economic trends and order backlog; risks related to efforts to complete and integrate current and/or performance is based upon or derived from information provided by third future acquisitions; risks related to the worldwide financial instabilities; risks party consultants and other industry sources. We have not independently related to our intellectual property; new product offerings from our verified and cannot assure the accuracy of any data obtained by or from these competitors; unanticipated manufacturing or supply problems; risks related to sources. 2

KEY DUAL-LISTED TECHNOLOGIES PROFITABLE GROWTH Optical & X-Ray NASDAQ / TASE Revenue Growth Facts 5Y CAGR – 18% EMPLOYEES METROLOGY Leading 650 Dimensions & Materials Operating Income Growth Metrology 5Y CAGR – 37% Innovator for Advanced Process Insight GLOBAL PRESENCE R&D SITES Cash Reserves ~$180M World wide offices USA & Israel Non-GAAP Financials • 3

$251 Success Tied to $149 $112 Revenue In Million $ 2013 2015 2018 Diversified Portfolio Customers’ partnership $79 $59 X-ray & Optical Development to Manufacturing $45 Dimensions & Materials Joint development programs Operating expenses In Million $ 2013 2015 2018 $68 Disruptive technologies Solid financial model Coupling SW & HW Operational efficiency $22 Emerging Metrology needs Growth by investment $14 Operating income In Million $ 2013 2015 2018 4 Non-GAAP Financials •

Record High 2018 Highlights Revenue Growth +13% YoY 18% CAGR 5 Years $248 Elevated R&D Investment $222 Operating Margin - 27% Q4 $60 Revenue Contribution: $164 Q3 $64 $149 $121 Segments Territories Q2 $62 50 % Healthy Mix Q1 Memory $63 2014 2015 2016 2017 2018 In Million $ 5 Non-GAAP Financials •

Innovative 300mm 10um 5nm 0.5Å Wafer Pad Pitch Precision Optical / X-Ray Semiconductor Dimensions / Materials Segments Parameters 6

Unique Complementary Software Dimensional Materials Services Physical & Standalone Install Base Integrated & Mathematical Models Standalone Materials Features and Fleet Management Metrology Upgrades Optical CD Hybrid Ecosystem Film Thickness 7

FLEET MANAGEMENT Hybrid Metrology CMP Lithography Interlacing HW & SW Inline solutions Deposition ETCH Monitor Train & Retrain Open Eco System Physical Models Complementary Models NOVA MARS NOVA Fit 8

Digital Semi Market Wafer Capacity 2017 60B GB 40% Human 2000 2010 2020 2025 Internet Mobile Internet Connected World Data Economy Connectivity Mobility Productivity Veracity 9

Multi Catalysts for Semiconductors Demand Smart Smart AI Cryptonomy Smart Autonomous AR / VR Cities Sensors Industry Vehicle 1 PB 4 TB 25% 30% 50% 30% 70% Per Car Per day CAGR CAGR CAGR CAGR CAGR Per Day 10

Smart Smart Sensors Industry Data Connected Management Sensors Smart Automotive City Semi GROWING Growth Demand AR / VR AI for Data Network Mobile Infrastructure Management Devices Cloud 5G & Computing Power Beyond Cryptonomy Smartphones Capacity Continuous demand for improvement Wearables Robots Performance Density Scaling Cost 11

1,000 10,000 HIGH PREFORMANCE Requirement Variety 100 100 Density DATA STORAGE (Gigabyte) Scaling MOBILITY POWER (Watt) storage (capacity) 1 1 Energy efficiency Access speed IoT SENSORS 0,01 0,01 Powerful processing (speed) 0,000 0,0001 0,0001 0,01 1 100 10,000 DATA RATE (Giga operations/sec) 12

Growth Beyond Demand Metrology Intensity METROLOGY INTENSITY Scaled Devices Planar FinFet Nano-Wires 3D Profiles Multiple Parameters Thinner Films Planar NAND VNAND Gen-1 VNAND Gen-x DRAM Gen-1 DRAM Gen-X DRAM Gen-Y Complexity 13

Beyond Architectural Changes Reduce Leakage & Increase performance Expanded TAM 48 Elements Unique Differentiation Parameters Variety Composition 26 Elements Stress Strain Doping Chemical State 13 Elements 14

Enabled by Materials Endurance Cross talk Charge density Bit Density Bit Density CHALLENGES High Program V Charge stability Bit density TLC Channel resistance MLC TLC TLC QLC TECHNOLOGY Future NVM Floating Gate MRAM Xpoint RRAM FeRAM METROLOGY Planar Floating High K Blocking Tunnel oxides Tunnel Oxides Tunnel Oxides Needs Oxide Gate NAND Charge Trap layers Charge Trap Layers Charge Trap Layers Doped Floating ALD gate ALD gate ALD gate Gate Staircase etch Carbon Hard Masks Barrier metal Next-gen hard mask 15 BEYOND TRADITIONAL DIMENSIONAL SCALING

Enabled by Materials Low Voltages Multiple Low VT Low VT Stability Drive Current CHALLENGES Fast clock cycles Off state leakage Short channel fails SD resistance Low drive current Off state leakage Electro migration fails Future Designs TECHNOLOGY Gate All Around 3D Transistors CFETS Metrology Poly SiON Gate Stack High K Metal Gate FinFets Cobalt Contacts Needs Strained Silicon Strained Silicon Replacement HKMG Advanced ALD B doping Annealed HK Cobalt EM capping Gate dopants 16 BEYOND TRADITIONAL DIMENSIONAL SCALING

Dimensional Services Materials M&A Metrology Metrology Inorganic Share Process Control > $50M Gains From $300M Nova200 to TAM Expansion 300 $200M Disruptive Organic Innovation $300M Reaching revenues $100M of $300M organically M&A Target 2012 2017 17

Why do we CONTINUE GROWING? Diversification Customers Mix Nodes Segments Technology Geography Increasing Market Share while Expanding TAM 18